The Pricing To Market Behavior Research Of Vertical Specialization Perspective

Exchange rate pass-through and its incompletion is one of the hot issues ininternational economics studies and industry economics in recent years. This is becausethe size and law of exchange rate pass-through for understanding a country’s monetarypolicy (including the exchange rate regime,etc.), the price level and the regulation ofinternational trade imbalances and other conditions affected by exchange rate changeshave important policy implications.And exchange rate pass-through incomplete,especially from the microscopictheory of industrial organization to explain them,“Pricing To Market”(hereinafterreferred to as PTM) theory (and the associated number of studies), has shown, thereason why exchange rate pass-through incomplete is that the export enterprises existpricing to market.Combined with the new features of foreign trade in our country in recent years,especially export products production globalization and the internationalisation of theRMB, These two trends have influence for PTM? How big? In the current under thebackground of the appreciation of the RMB, is obviously a very worthy of study.In this regard,Based on the2003to2011, We select8kinds of4digits HS codeexports to construct panel data according to China’s export trade size. In two caseswhere vertical specialization is taken into account and is not taken into considerationrespectively, We study PTM heterogeneity(and its changing trend and degree of change)of China’s exporting enterprises whose importers range from developed countries(America, Japan, South Korea)to ASEAN (Malaysia, Thailand, the Philippines). Secondfurther from the internationalisation of the RMB this two trends, by building an openmultilateral economic general equilibrium (DSGE) models are discussed from the pointof view of macroscopic model under different price currency and different degree ofvertical specialization, the domestic export enterprises in the face of the appreciation ofthe RMB，the impact when taken according to the market pricing behavior. Theempirical results show that:First, under the condition of without considering the vertical specialization,Ourcountry enterprise in accordance with the market pricing behavior heterogeneity inexports to developed markets PTM levels than exports to ASEAN market PTM levels. After joining the vertical specialization, we found that in the United States, the verticalspecialization have no obvious effects on PTM behavior, but for east Asia and ASEANmarket, vertical specialization has significant effects on PTM, and making the countryheterogeneity across the PTM further widening; And, more importantly, evenconsidering the vertical specialization, and only in the RMB and intermediate importerof currency exchange rate and the RMB and the final product exporter under thecondition of currency exchange rate change trend is consistent, vertical specialization inaccordance with the market pricing behavior have influence;Second, further analysis when the vertical specialization impact on PTM (exportsto the ASEAN and East Asian markets), found that as the degree of verticalspecialization becomes large, once it exceeds a certain threshold, PTM degree ofchange will significantly increase; when vertical specialization on PTM did notinfluence (exports to the U.S. market), there is no similar phenomenon.Third, the reason by comparing the DSGE model the intermediate goods priceindex and export price index face the same impact of RMB appreciation figure showsthe impulse response function first appreciation of the RMB to the middle price ofimports, so that the export enterprises to reduce production costs, then according to thefalling cost of their situation, the decision PTM, cost down more companies cut pricesnaturally have more space, that have greater pricing power; also because of importedintermediate goods prices fell, leading to imported intermediate product volume in theshort term a significant increase in process, but over time, the amount of importedintermediate goods decreased slowly until the emergence of the phenomenon of falling.This is because in the long run, imports of intermediate goods is to serve the exportenterprises, export volume that determines the demand for imported intermediategoods. So, when the RMB appreciation in the long run, the export will be subject to acertain degree of inhibition, so demand for imported intermediate goods decreased,resulting in long-term decline in imports of intermediate goods.Four, in addition to taking into account the use RMB settlement in China’s foreigntrade settlement increasingly high proportion of the development trend, compared toexplore the Dollar-denominated and RMB-denominated, the different verticalspecialization exporting firms pricing behavior to market found that overall ondollar-denominated export enterprises by RMB appreciation impact, adjust pricingbehavior to market faster than RMB-denominated situation, that in the short term, theuse of RMB-denominated export enterprises have low degree of PTM, more to revalue the exchange rate shocks pass out, but long-term change insignificantly.